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Study: India's private banks slow to add ex-urban ATMs

September 19, 2012

The State Bank of India is underscoring its words with actions, placing increasing emphasis on non-metro city and rural ATM installations in the wake of its call for greater financial inclusion. However, most private sector banks have been slow to follow the SBI's lead.

A study by the Associated Chambers of Commerce and Industry in India found that, unlike other banks, the State Bank of India is expanding its ATM network in non-metro and semi-urban centers faster than in the metros.

The SBI operates 5,783 ATMs in the largest metro cities, 7,511 machines in urban centers other than metros and 6,419 in semi-urban areas. Even in rural areas, the bank has established 2,756 ATMs, Assocham found.

Overall, the private sector banks have focused on aggressive expansion of their ATM networks in the most densely populated metropolitan centers, followed by "tier two" cities. Among the private sector banks, Axis Bank had the largest ATM network as of July 2012, followed by HDFC Bank with 9,709 and ICICI Bank with 9,366.

With the exception of SBI, Indian banks have to go a long way before achieving the financial inclusion in the semi-urban and rural areas, Assocham said in its report.

"As was pointed out by the Finance Minister, today traders are not able to deposit their cash of sales proceeds at night in any bank," said Assocham Secretary General D. S. Rawat. "[As the result] they have to keep it either in the shop premises or at home, taking the risks of theft and other insecurity issues. We must have technology-driven day-and-night banking so that a wider section of the informal economy is brought into the banking network."

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